Good (and Bad) Background Checks

More organizations use background checks to investigate criminal histories and to make hiring and firing decisions. It's up to CSOs to make sure this powerful but flawed weapon doesn't backfire.

To cope with the information underload, companies are increasingly asking for job candidates' permission to turn to other sources. In a recent survey done by Jorgensen's group, 80 percent of HR professionals reported that their companies did at least some criminal background checks on prospective employees in 2003, up from 51 percent in 1996. And 35 percent looked at candidates' credit records, compared with 19 percent seven years earlier.

The proliferation of different kinds of databases has helped to power these searches. Some of the large background screening companiessuch as ChoicePoint and First Advantagehave been compiling vast databases of public records that were previously available only to researchers who went to a bevy of local courthouses and did a labor-intensive "hand search" on a particular person. Smaller companies such as National Background Data have similar databases that they sell wholesale to small background check companies. All these databases promise quick and inexpensive access to criminal records, sexual offender registries, motor vehicles bureaus and other repositories from across the country, but their results are incomplete and often out-of-date.

The major credit bureaus also have amassed detailed records on nearly everyone in the country. An "above the line" report from a company like Equifax culls identifying information such as past addresses, which can help background screeners target their "hand searches" or pinpoint discrepancies on a job candidate's résumé. A full report includes everything from outstanding balances on credit cards to bankruptcy filings, which some companies believe helps them to identify employees who are unreliable or susceptible to bribery. Consumer advocates, however, fear that this type of data is used unfairly when the job opening has no financial responsibilities.

Meanwhile, the fallout from Sept. 11 has ratcheted up the pressure on employers to do research through official channels. "Great gobs of the workforce that were never before subjected to background checks now are because of what employers have access to," says Alan Westin, cofounder of influential think tank Privacy and American Business. The Patriot Act, for instance, requires states to conduct criminal investigations on all 3.5 million drivers who transport hazardous materials in the United Statesan onerous enough task that the Transportation Security Administration recently pushed a key program deadline back, again, this time to Jan. 31, 2005. The Sarbanes-Oxley Act also intensified the need for companies to trust their employees.

As a result, the demand for qualified screeners has become so acute that, in May, an official from the federal Office of Personnel Management, testifying before a U.S. House of Representatives committee, used the word stretched to describe the nation's resources for conducting background checks. "Demand for background checks exceeds capacity of the private-sector companies that provide these services," Associate Director Stephen Benowitz said, explaining a backlog of 340,000 background checks across the government.